Pages Menu
TwitterRssFacebook
Categories Menu

Posted by on Sep 17, 2008 in Economy, Politics | 0 comments

‘How Freddie and Fannie Paid the State to Keep Quiet’: From Le Monde of France

For a French – a very French – persective on the mortgage crisis, I would like to turn your attention to this article by Pierre-Antoine Delhommais of Le Monde.

I don’t recall seeing anything that explained the somewhat esoteric situation involving Freddie Mac and Fannie Mae with such humor or effectiveness.

Delhommais starts out this way:

“There’s a positive side to financial crises: they allow the French to improve their English. Each time, they learn a new phrase: during the stock market crash of 1987 it was program-trading, with the failure of Long Term Capital Management in 1998 it was hedge fund, and then there was rogue trader with Jerome Kerviel [In 2008, Kerviel single-handedly lost €4.9 billion for French investment bank Société Générale ].

Over the past year, the French have become familiar with subprime mortgages, mentioned only six times in the Francophone press in 2006, but 8,400 times in the second half of 2007. Finally, over the past two weeks they have learned about Freddie Mac and Fannie Mae, who sound in such a joyous way almost like the names of comic strip characters, but which now find themselves at the center of one of the biggest financial bailouts in history.”

After examining the Great Depression origins of the two institutions, Delhommais explains that President Lyndon Johnson turned Fannie Mae into a ‘state-held private enterprise,’ planting the seeds of the mess we see today. And why did Johnson do this? Here’s a little wrinkle few have heard:

“After it turned 30, the status of Fannie changed, when President Johnson decided that its loans were unfair competition for those of the Treasury, which was straining to finance the war in Vietnam.”

Delhommais’sdiscussion of how the two agencies used their status to buy off the Congress and the Executive is most interesting, indeed.

Pierre-Antoine Delhommais

Translated By Kate Davis

September 14, 2008

France – Le Monde – Original Article (French)

There’s a positive side to financial crises: they allow the French to improve their English. Each time, they learn a new phrase: during the stock market crash of 1987 it was program-trading, with the failure of Long Term Capital Management in 1998 it was hedge fund, and then there was rogue trader with Jerome Kerviel [In 2008, Kerviel single-handedly lost €4.9 billion for French investment bank Société Générale ].

Over the past year, the French have become familiar with subprime mortgages, mentioned only six times in the Francophone press in 2006, but 8,400 times in the second half of 2007. Finally, over the past two weeks they have learned about Freddie Mac and Fannie Mae, who sound in such a joyous way almost like the names of comic strip characters, but which now find themselves at the center of one of the biggest financial bailouts in history.

On Sunday, September 7, the American Treasury Department announced the bailout of the Federal National Mortgage Association (Fannie) and Federal Home Loan Mortgage Corporation (Freddie), the two pillars of financing for the American property market. As this is the United States, there was no talk of nationalization, but that is, indeed, what it is.

READ ON AT WORLDMEETS.US, along with continuing translated foreign and English-language press coverage of the unfolding financial crisis.

Click here for reuse options!
Copyright 2008 The Moderate Voice
Twitter Auto Publish Powered By : XYZScripts.com